Monday, October 22, 2007


Nice to be back from a brief vacation. Per today's New York Times, 42,904 is the number of layoffs estimated by Challenger, Gray & Christmas to have occurred this year at financial services firms based in New York. Not all of the sacked employees are from there, however.

Is it me or were these stealthy layoffs -- almost as if to say, "We are not proud of getting leaner and don't want to admit failure." says the numbers are roughly 8% of the Wall Street work force and they are worried more is to come. They also report that residential rents are declining in Manhattan and wonder aloud whether Tishman together with CalSTRS and Blackrock over paid for Peter Cooper Village/Stuyvesant Town. (Answer: imo, short-term yes; long-term, probably no.)

I'm not super concerned yet, and here's why. If the downturn is supposed to be short and not too deep as everyone is predicting, then big tenants are not going to want to give up too much space too quickly. Why? It might just be cheaper to eat the space. If you give it up too fast and the economy turns in 12-18 months, you are right back on the market for space again, and who knows were rents will be? (Short term sublease? Not really practical.) Commercial lease prices in Manhattan have not been affected yet to my knowledge, and I am not yet throwing in the towel until I see commercial absorption tank. I've been wrong before, of course, and even if I am then you might have a new buying opportunity for the players that have been sitting out the wave.